Potential oil window is last gasp for Utica Shale

Jim McKinney, senior vice president and general manager from EnerVest, a Houston-based company, said his company believes that with changes in drilling techniques, activity will increase in the oil-rich northern part of the Utica Shale, which includes Trumbull County.

“When companies first drilled, they were using the same techniques they were using in the dry- and wet-gas areas of the Utica,” he said.

EnerVest has found in Tuscarawas and Guernsey counties that by using more water and sand in the fracking process, there can be success in the oil-rich portions of the Utica, McKinney said.

“Oil has different molecules than gas,” he said.

Companies were using 200 feet to 250 feet spacing between injections, but for the oil area it needs to be shorter, about 150 feet, McKinney said.

“It allows the oil to move more freely toward the well bore,” he said.

If the tests for EnerVest are successful, there will be companies interested in leasing land in Trumbull and Stark counties, McKinney said. Trumbull and Stark counties are thought to be areas with oil-rich shale.

The sections of the Utica can be divided into the dry-gas area, which is located around Belmont, Harrison and other counties in the southeast part of the state. Then there is the wet-gas area, which includes Carroll County and the sections of Ohio where most of the drilling activity has taken place. Finally, there is expected oil-rich section on the edge of the shale, which no company has successfully exploited at this time.

The results of EnerVest’s first oil test wells will become public soon with the release of Ohio Department of Natural Resource’s second-quarter production reports.

The results thus far have shown the new technique will produce economic and even “very profitable” wells, McKinney said.

EnerVest first mentioned the new techniques in the second-quarter U.S. Securities Exchange Commission filing of one of its subsidiary companies, EV Energy Partners, where it stated that hydraulic-fracturing methods are still being developed for the oil areas of the Utica.

“We are currently seeking joint venture partners to develop and design hydraulic-fracturing techniques that will allow wells in the volatile oil window to produce at economic levels,” the filing states.

The company, however, included a word of caution in the report, stating, “We may not be successful in our additional efforts to monetize the Utica Shale properties; it may take longer to complete the divestiture process than we expect, or we may decide to delay the monetization of all or a portion of the Utica Shale properties.”

The Institute for Energy Research in its report of the Utica also touts the potential for oil located within the shale formation.

“Almost 636,000 barrels of oil were produced from the shale oil-producing wells in the Utica Shale formation in 2012. By 2015, it is expected that shale wells will produce about 73 percent of Ohio’s oil,” the IER report says.

The EnerVest announcement was made at a time when a number of companies have announced plans to curtail or stop activities in the northern Utica.

Further evidence that companies are pulling away from developing oil and gas comes as BP or its partner companies have received permission to plug four wells in Trumbull County.

ODNR records show that BP received permission to plug and abandon its Jewett well in Johnston Township and that Brammer Engineering was approved to cap three other wells — the Dunbar well in Vernon Township, the Roscoe well in Gustavus Township, and the Morrison well in Mecca Township.

Brammer Engineering is a Shreveport, La.-based company that was working with BP on the Trumbull wells.

These are the only four Utica Shale wells in the last year in Trumbull County that ODNR has given permission to cap. There have been other wells in the shallower Clinton formation capped as well.

Mark Bruce, spokesman for ODNR, said the same type of cement used to create the casing will be pumped all the way down the well to the Utica formation.

Although it is possible the company could drill out and try and reuse the well at a later date, this is not considered a temporary action, he said.

BP released this second-quarter statement about its decision to leave the Utica Shale:

“Following on from the decision to create a separate BP business around our U.S. lower 48 onshore oil and gas activities, and as a consequence of disappointing appraisal results, we have decided not to proceed with development plans in the Utica Shale. First quarter and first half 2014 include a $521-million write-off relating to the Utica acreage.”

In addition, Halcon Resources Corp. out of Texas, another company that had made significant investments in Trumbull County, didn’t mention the Utica Shale at all in its second-quarter report.

The company announced in March it was suspending its drilling operations in the Utica.

Comments

Well, at least there are some jobs capping this nightmare scenario. Never mind the cost, just say "jobs" often enough and people will swallow anything. For all those who jumped on the bandwagon, TRY to remember this outcome next time the snake oil salesman comes around. Jobs- nowhere near what was toutedJobs- not local people for the most partEnvironmental impact- directly affects those who live here and own non-leased property here.